Working Paper: NBER ID: w30911
Authors: Manudeep Bhuller; Domenico Ferraro; Andreas R. Kostl; Trond C. Vigtel
Abstract: How has the internet affected search and hiring, and what are the implications for aggregate unemployment? Answering these questions empirically has proven difficult due to selection in internet use and difficulty in measuring the search activities of both sides of the labor market. This paper overcomes these challenges by combining plausibly exogenous variation in the availability of high-speed internet in Norway with large-scale survey and administrative data on hiring firms, job seekers, and vacancies. Our empirical analysis shows that the internet expansion led more firms to recruit online and caused 9% shorter vacancy durations and 13% fewer unsuccessful hiring attempts. While the expansion increased job-finding rates by 2.4% and starting wages by 6% among the unemployed, we find no evidence of changes in job-to-job mobility or wage growth for employees. To interpret these findings, we develop and calibrate an equilibrium search model with endogenous job creation and destruction where workers decide how much search effort to exert on and off the job. Through the lens of the calibrated model, we find that better search technology is the main driving force behind our quasi-experimental evidence. Our calculations indicate that the steady-state unemployment rate fell by as much as 14% due to the broadband internet expansion.
Keywords: No keywords provided
JEL Codes: J21; J39; J64; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| availability of broadband internet (L96) | online recruitment efforts by firms (M51) |
| online recruitment efforts by firms (M51) | reduction in vacancy durations (R21) |
| availability of broadband internet (L96) | reduction in vacancy durations (R21) |
| availability of broadband internet (L96) | decrease in unsuccessful hiring attempts (J63) |
| availability of broadband internet (L96) | increase in job-finding rates for the unemployed (J68) |
| availability of broadband internet (L96) | increase in starting wages for the unemployed (J68) |
| improved search technology (O33) | observed effects on labor market outcomes (J48) |
| broadband expansion (L96) | potential reduction in steady-state unemployment rate (J68) |